ve ueuulleu luuiu De Tuilaleu will aus Styr. ) Wiley Company's Income statement for Year 2 follows: Wiley Company Direct Method of Determining the Net Cash Flows from Operating Activities Sales Cost of goods sold Gross margin Selling and administrative expenses Income before taxes Income taxes $ 2,750 1,eee 1,750 400 1,350 549 Adjustments to a cash basis: Net income 816 Adjustments to a cash basis: The company's selling and administrative expense for Year 2 Includes $78 of depreciation expense. Selected balance sheet accounts for Wiley at the end of Years 1 and 2 are as follows: Year 2 Year 1 Selling and administrative expenses Adjustments to a cash basis: $210 $150 $ 35 $235 $182 $ 30 Current Assets Accounts receivable Inventory Prepaid expenses Current Liabilities Accounts payable Accrued liabilities Income taxes payable $102 $ 7 $ 106 $ 73 $ 29 $ 28 Income taxes Adjustments to a cash basis: Required: 1. Using the direct method, convert the company's Income statement to a cash basis? 2. Assume that during Year 2 Wiley had a $11,000 gain on sale of Investments and a $6,000 loss on the sale of equipment. Would these transactions affect the computation in (1) above